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LEW WARNS BANKERS ON DEBT CEILING — Per a person familiar with the matter: “The Financial Services Roundtable met with Secretary Lew [Wednesday] afternoon to discuss the state of the economy and the need for Congress to act immediately to raise the debt limit in order to avoid a repeat of the market and economic turmoil we saw in 2011. Lew reiterated the position he outlined earlier in the day in a letter to Congress that there are no options other than to raise the debt limit and noted that failure to do so would put at risk millions of government payments to families, local and state governments, and businesses of all sizes.

COMING OCT. 17th: M.M. BREAKFAST WITH RICHARD CORDRAY — Please join me and the new Director of the CFPB at our next Morning Money Breakfast Briefing, October 17 in DC. Doors open at 8 a,m,, program shortly thereafter. RSVP to http://bit.ly/14HU2Hb.

DOOMSDAY SCENARIO: GOP MOVES DEMANDS TO DEBT CEILING — POLITICO’s Manu Raju and Jake Sherman: “A large number of Senate and House Republicans are raising the threat of a debt default to curtail, delay or defund President Barack Obama’s signature domestic policy achievement. It’s a major gamble — risking the prospect of a first-ever default on U.S. debt — but it’s one seriously being considered by the same Republicans who have refused to join Cruz’s filibuster attempt … ‘I think the debt ceiling is a good opportunity … to defund or at least delay,’ said Senate Minority Whip John Cornyn ... ‘I’m for delay, defund, repeal, demolish, destroy, whatever the ‘d’ is, when it comes to Obamacare — I’m for.’ …

“The shift in strategy is a sign of how Republicans — tired of being divided over tactics in this fall’s fiscal fights — are eagerly looking to unite in the next battle, hoping to win concessions from the White House. Many Republicans believe that they would lose a public relations war if government agencies were forced to close down, much the way Republicans did in the budget battles with President Bill Clinton in the 19 90s. But on raising the $16.7 trillion debt ceiling, Republicans believe they’re on much firmer political ground to demand some spending cuts.” http://politico.pro/1h3ZgzC.

DUBIOUS ASSUMPTIONS — Hard to figure how threatening and possibly forcing an economy-crushing default over Obamacare rather than a far more mild government shutdown is stronger political ground for the GOP. There is no scenario under which Democrats would agree to an Obamacare delay as part of a debt ceiling hike. So Republicans will either have to give in on that demand or be blamed for forcing an historic default or near default over a quixotic quest to block a duly enacted law. Polls may show Obamacare is not wildly popular but they also show that even most Republicans do not want to force a default over the law. Will the White House eventually throw some kind of sweeteners in a debt ceiling deal? Possibly. But Obamacare won’t among them.

THIS MORNING ON POLITICO PRO FINANCE — Zachary Warmbrodt on the Libor investigations taking aim at the middle men. … MJ Lee on the latest book set to be released by an ex-Goldman Sachs executive. … To learn more about Pro's subscriber-only coverage — and to get Morning Money every day before 6 a.m. — please contact Pro Services at (703) 341-4600 or info@politicopro.com.

GOOD THURSDAY MORNING –Tune in this morning @ 8:15 a.m. for WOMEN RULE — POLITICO, Google and the Tory Burch Foundation take their "Women Rule" series live this morning with a conversation about how female leaders are changing policy, politics and their communities. Featured panelists include Beverly Bond from BLACK GIRLS ROCK!, Stephanie Cutter from CNN, Liz Feld from Autism Speaks, Sue Gardner from Wikimedia, Lauren Bush Lauren from FEED, and Nell Merlino from Take Our Daughter to Work Day. Watch live at politico.com/live and follow the conversation on Twitter using #WomenRule.

DRIVING THE DAY — President Obama at 10:50 a.m. gives a speech about Affordable Care Act that the White House is billing as an effort to speak directly to people about the new benefits available to Americans without all the Beltway noise … Initial jobless claims at 8:30 a.m. expected to tick up to 325K from 309K … Second estimate of Q2 GDP expected to rise slightly to 2.6 percent from 2.5 percent … Pending home sales at 10 a.m. expected to dip one percent …

** At JPMorgan Chase & Co., we are using our expertise, capital and global reach to help solve the world’s most pressing challenges. Like the Global Health Investment Fund — a new vehicle for mobilizing capital to advance life-saving vaccines and technologies. Learn more here www.jpmorganchase.com/ghif **

POLL BLAST: OBAMA RATING DROPS — NYT’s Jonathan Martin and Allison Kopicki: “President Obama’s standing with Americans has slumped significantly, as the public remains skeptical about his health care law and unsure about the economy, according to the latest New York Times/CBS News poll. Forty-nine percent of the public disapproves of Mr. Obama’s job performance, and 43 percent approves, matching his worst measures in two years … Across the board — on foreign policy, including Syria and Iran; the economy; health care; and the federal budget deficit — more Americans disapprove than approve of the president’s performance. Mr. Obama is being hurt by a public that has grown sour in the face of what people see as a stagnating economy: two-thirds of Americans say the country is on the wrong track, the highest number since early in 2012. And with Washington locked in yet another contentious debate over government spending, people are showing signs of exasperation about their elected leaders’ inability to reconcile their differences …

“Yet even as his health law remains unpopular, Mr. Obama has a majority of the public on his side when it comes to the Republican effort to stop funding for the program. As some Congressional Republicans try to link spending on the health law to the Oct. 1 deadline for keeping the federal government running, 56 percent of Americans say they prefer that Congress uphold … Obamacare and make it work as well as possible. Just 38 percent of the public wants Congress to stop the law by cutting off funding. … [N]early 7 in 10 say they would prefer [a debt ceiling] agreement they do not fully support rather than for the country to default on its debt.” http://nyti.ms/16rX2Lq.

JPM SETTLEMENT PRICE TAG RISES TO $11 BILLION — FT’s Tom Braithwaite and Kara Scannell in New York: “JPMorgan Chase is preparing to settle all of its outstanding mortgage securities issues for about $11bn as part of a deal with US state and federal authorities … The $11bn comprises $7bn cash and $4bn of mortgage relief for struggling homeowners as penalties for allegations that the bank packed mortgage-backed securities with faulty home loans in the run-up to the crisis … If finalised, the settlement would surpass a $4.5bn settlement paid by BP to resolve criminal charges over the Gulf of Mexico oil disaster. … Crucially, the deal, which is expected to be agreed formally within days, would resolve a multibillion-dollar claim from the [FHFA] for alleged mis-selling of mortgage securities, which was seen as the single biggest legal threat to the bank.

“The US’s threat to sue the bank on Tuesday reignited negotiations between the parties. The bank’s initial settlement offer was rejected by Eric Holder, the US attorney general, as too low, a person familiar with the matter said. Although the bank has now expressed willingness to pay the $11bn amount, it is resisting any sweeping admission of guilt, which could jeopardise its defence against private litigation on similar issues. The scope of the bank’s admissions represents a sticking point — both because they could fuel other suits and because JPMorgan had previously denied wrongdoing in some of them.” http://on.ft.com/15vaU6R.

FISCAL FLY AROUND —

SHUTDOWN CHANCES RECEDE — POLITICO’s Burgess Everett: “Senators struck a deal on Wednesday night to accelerate consideration of the House-passed government spending bill, increasing the chances that a government shutdown can be averted.

After working all day to reach agreement, the Senate unanimously began considering the spending bill, which defunds Obamacare and funds the government through Dec. 15. That speeds up the long Senate process of actually passing the bill by at least a day, putting final passage of the bill on course for Saturday, possibly earlier. … Now, House Speaker John Boehner and his restive Republican caucus will have more time to consider their next move after the Senate sends back its version of the continuing resolution or CR, minus the defund Obamacare language. The House will have to decide whether to pass the amended bill or send it back with changes, like a one-year delay of Obamacare’s individual mandate.” http://bit.ly/1bdq5UG.

SECOND STAGE OF THE SHOWDOWN — NYT’s Jonathan Weisman: “House Republicans will begin the second stage of the fiscal showdown on Thursday with a meeting to approve legislation to increase the debt ceiling and delay the health care law for a year, force construction of the Keystone XL oil pipeline, and speed up an overhaul of the tax code. … Aides to the Republican leadership said Mr. Boehner would make a decision about his next moves only after the Senate completes work on a bill that Democrats hope will finance the government through Nov. 15 without any conservative policy measures.

“Senate Republicans conceded they were not likely to stop that … The biggest vote will be on the [Senate] spending bill later this week, when Democrats must win over 60 senators to cut off debate on the House measure. If that is achieved, a simple 51-vote majority will be needed on the Democratic version, which leaves the health care law alone.” http://nyti.ms/14JgSyk.

“The government is closer to running out of money to pay its bills than previously thought, the Treasury Department warned … Treasury Secretary Jacob Lew said the government would be left with just $30 billion cash on hand ‘no later’ than Oct. 17, and the Congressional Budget Office predicted these funds would be used up between Oct. 22 and Oct. 31 if legislation isn't enacted to raise the ceiling on government borrowing … That little cash could make it difficult, if not impossible, for the government to pay the roughly $55 billion in Social Security, Medicare and military payments due Nov. 1. …

“Unlike the previous budget battles that have consumed the federal government since 2011, there appear to be no back-room negotiations aimed at crafting a comprehensive deal that might offer a respite, or even a small deal to get past the looming deadlines.

‘I think we've got this false sense of security," Sen. Mark Warner (D., Va.) said in an interview. "This time, the wolf really could be at the door.’” http://on.wsj.com/19GWhsR.

BE AN AGRICULTURE PRO: Pro Agriculture, the second of three new Pro policy areas launching this fall, will debut on Wednesday, Oct. 2 and will feature breaking news and inside analysis from our best-in-the-business reporters. To learn more about Pro Agriculture, e-mail info@politicopro.com or call (703) 341-4600.

ALSO FOR YOUR RADAR —

INVESTMENT BANKS SMALLER, LESS RISKY — Financial News’ William Wright: “It is something approaching an article of faith that one of the failures of the barrage of regulatory reform in the five years since the collapse of Lehman Brothers is that big banks have continued to get bigger and that the system is as risky as ever. … While that’s a neat narrative, when it comes to investment banks — the parts of the system that regulators and politicians are fond of telling us are the riskiest of all — it has the distinct disadvantage of being completely inaccurate. The biggest investment banks have been on a crash diet over the past five years and have shrunk by nearly one quarter in terms of total assets since before the crisis … They have also cut their leverage in half.” http://bit.ly/18Y99Qr.

AG COMMITTEE LEADERS WRITE TO CFTC — The chairs and ranking members of the House and Senate Agriculture Committees write to the CFTC expressing concerns about its customer protections rule: “[A]s you work to finalize the rule on customer protections, we ask that you carefully weigh the benefits of these regulations against both the costs to America’s farmers and ranchers and the potential impact on consolidation in the [Futures Commission Merchants] industry. Full letter: http://bit.ly/1bHcTqw. House Ag also announced a hearing for next Wednesday Oct. 2 at 9 a.m. on customer protections.

CHINESE GIANT ALIBABA EYES U.S. LISTING — NYT’s Michael J. de la Merced and Neil Gough: “No business represents the rapid rise of the Internet in China quite like Alibaba, a company that is part eBay, part Google and part PayPal. Alibaba is now moving forward with plans for one of the biggest initial public offerings since Facebook’s … but in New York and not in its home market. Much is at stake for the Chinese company, as well as its prospective advisers and potential investors. The offering could value Alibaba at more than $75 billion, slightly bigger than eBay and more than twice as large as Yahoo. It is expected to be several orders of magnitude larger than Twitter’s forthcoming public offering, already one of Wall Street’s most anticipated deals.

“Still, Alibaba’s debut will land far away from Hong Kong, where the company had long sought to make its stock listing home. The Internet giant and its executive chairman, Jack Ma, have sought to keep control of the company firmly with its founders, following in the footsteps of Facebook and Google. But the rules of the Hong Kong Stock Exchange prohibit dual classes of stock and other types of corporate structures that let minority shareholders preserve control of companies. Talks between the two sides over a potential compromise came to a halt on Wednesday.” http://nyti.ms/1dKDhhk.

** At JPMorgan Chase & Co. we are committed to using our expertise, capital and global reach to help solve the world’s most pressing challenges. That’s why we have partnered with the Bill and Melinda Gates Foundation to launch the Global Health Investment Fund — a first-of-its-kind vehicle for mobilizing investment capital to advance vaccines and other technologies that have the potential to save millions of lives from HIV/AIDS, tuberculosis, malaria and other deadly conditions that disproportionately affect people from low-income countries. Investors in this debut offering include Grand Challenges Canada, KfW Bankengruppe, IFC, the Children’s Investment Fund Foundation, GlaxoSmithKline, Merck, The Pfizer Foundation, Storebrand, JPMorgan Chase and qualified individual and institutional clients of our Private Bank, with catalytic support from the Bill & Melinda Gates Foundation and the Swedish International Development Cooperation Agency. The Fund will be managed by LHGP Asset Management. Learn more at www.jpmorganchase.com/ghif **